Suppose That a Country Has an Inflation Rate of About

question 102

Multiple Choice

Suppose that a country has an inflation rate of about 3 percent per year and a real growth rate of about 6 percent per year. Suppose also that it has nominal GDP of about 200 billion units of currency. What is the highest possible deficit it can have without raising the debt-to-income ratio?

• A)just under 18 billion units
• B)just under 12 billion units
• C)just under 9 billion units
• D)just under 1 billion units

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Definitions:

Internal Validity

The degree to which the results of a study can be attributed to the experimental treatments or interventions rather than other factors.

Spurious Relationship

An apparent relationship between two variables that is actually caused by a third variable.

Variables

Elements, features, or factors that are likely to vary or change within the context of a scientific study or experiment.

Manipulation Checks

Procedures used in experimental research to determine whether the experimental manipulations have the intended effect on the study subjects.